Part 1 Support And Resistance

What are Options?

Options are a type of derivative instrument in financial markets.
This means their value is derived from an underlying asset, such as stocks, indices, commodities, or currencies.

An option gives you the right, but not the obligation, to buy or sell the underlying asset at a predefined price (strike price) before or on a specific date (expiry date).

Types of Options

Call Option – Right to buy an asset at a fixed price before expiry.

Example: If you buy a call option of Reliance at ₹2,500, and the stock goes up to ₹2,700, you can still buy at ₹2,500 and profit.

Put Option – Right to sell an asset at a fixed price before expiry.

Example: If you buy a put option of Infosys at ₹1,500, and the stock falls to ₹1,300, you can still sell at ₹1,500 and profit.

Key Terms in Options

Premium – Price you pay to buy the option.

Strike Price – Pre-decided price at which you can buy/sell.

Expiry – The last date till which the option is valid.

ITM (In the Money) – Option has intrinsic value.

OTM (Out of the Money) – Option has no intrinsic value (only time value).